Alicia Ault

The Food and Drug Administration has issued a final rule that would require medical glove makers to improve their products' ability to serve as a barrier against pathogens.

Manufacturers are being given 2 years to comply with the new regulations.

The goal is to reduce the risk of transmission of bloodborne pathogens such as HIV and hepatitis B, according to the FDA. While the agency can't quantify how many cases might be prevented with better barriers, it estimated that approximately 2.4 HIV infections occur each year due to “problems with the barrier protection properties of gloves used in health-care settings.”

The FDA estimates that 140 health-care workers are infected with the hepatitis B virus (HBV) on the job each year, primarily from percutaneous injuries. About a third, or 40 cases, may be due to glove defects, according to the agency.

There is less evidence that glove defects are associated with hepatitis C, said the agency, noting that most occupational exposures are from needle sticks. The agency has inspected gloves—used for patient examinations and surgical procedures—since 1990. At that time, the International Organization for Standardization (ISO), ASTM International, and the FDA had the same standards for glove quality. A few years later, the ISO and ASTM began requiring higher standards.

The agency has allowed a defect rate of 4% for gloves used during patient exams and 2.5% for gloves used in surgery.

With more and more brands of gloves being marketed and sold, the agency hopes to maintain that defect rate. To do so means increasing the quality standards, said the agency.

The FDA estimates that about 2% of the 39.2 billion gloves currently marketed are defective—some 940 million gloves. There are more than 400 manufacturers, but the number of gloves made and sold is expected to vastly increase in the next 10 years. If standards were left at their current level, 10 years from now, some 1.2 billion defective gloves would be sold.

The agency said the benefits of higher standards will outweigh the costs. It will cost about $6.6 million a year, but will result in savings of about $15 million due to reduced need for blood screens and fewer infected health-care workers.

The agency said it will continue to fail lots that have pinholes or visual defects.

The Food and Drug Administration has issued a final rule that would require medical glove makers to improve their products' ability to serve as a barrier against pathogens.

Manufacturers are being given 2 years to comply with the new regulations.

The goal is to reduce the risk of transmission of bloodborne pathogens such as HIV and hepatitis B, according to the FDA. While the agency can't quantify how many cases might be prevented with better barriers, it estimated that approximately 2.4 HIV infections occur each year due to “problems with the barrier protection properties of gloves used in health-care settings.”

The FDA estimates that 140 health-care workers are infected with the hepatitis B virus (HBV) on the job each year, primarily from percutaneous injuries. About a third, or 40 cases, may be due to glove defects, according to the agency.

There is less evidence that glove defects are associated with hepatitis C, said the agency, noting that most occupational exposures are from needle sticks. The agency has inspected gloves—used for patient examinations and surgical procedures—since 1990. At that time, the International Organization for Standardization (ISO), ASTM International, and the FDA had the same standards for glove quality. A few years later, the ISO and ASTM began requiring higher standards.

The agency has allowed a defect rate of 4% for gloves used during patient exams and 2.5% for gloves used in surgery.

With more and more brands of gloves being marketed and sold, the agency hopes to maintain that defect rate. To do so means increasing the quality standards, said the agency.

The FDA estimates that about 2% of the 39.2 billion gloves currently marketed are defective—some 940 million gloves. There are more than 400 manufacturers, but the number of gloves made and sold is expected to vastly increase in the next 10 years. If standards were left at their current level, 10 years from now, some 1.2 billion defective gloves would be sold.

The agency said the benefits of higher standards will outweigh the costs. It will cost about $6.6 million a year, but will result in savings of about $15 million due to reduced need for blood screens and fewer infected health-care workers.

The agency said it will continue to fail lots that have pinholes or visual defects.

The Food and Drug Administration has issued a final rule that would require medical glove makers to improve their products' ability to serve as a barrier against pathogens.

Manufacturers are being given 2 years to comply with the new regulations.

The goal is to reduce the risk of transmission of bloodborne pathogens such as HIV and hepatitis B, according to the FDA. While the agency can't quantify how many cases might be prevented with better barriers, it estimated that approximately 2.4 HIV infections occur each year due to “problems with the barrier protection properties of gloves used in health-care settings.”

The FDA estimates that 140 health-care workers are infected with the hepatitis B virus (HBV) on the job each year, primarily from percutaneous injuries. About a third, or 40 cases, may be due to glove defects, according to the agency.

There is less evidence that glove defects are associated with hepatitis C, said the agency, noting that most occupational exposures are from needle sticks. The agency has inspected gloves—used for patient examinations and surgical procedures—since 1990. At that time, the International Organization for Standardization (ISO), ASTM International, and the FDA had the same standards for glove quality. A few years later, the ISO and ASTM began requiring higher standards.

The agency has allowed a defect rate of 4% for gloves used during patient exams and 2.5% for gloves used in surgery.

With more and more brands of gloves being marketed and sold, the agency hopes to maintain that defect rate. To do so means increasing the quality standards, said the agency.

The FDA estimates that about 2% of the 39.2 billion gloves currently marketed are defective—some 940 million gloves. There are more than 400 manufacturers, but the number of gloves made and sold is expected to vastly increase in the next 10 years. If standards were left at their current level, 10 years from now, some 1.2 billion defective gloves would be sold.

The agency said the benefits of higher standards will outweigh the costs. It will cost about $6.6 million a year, but will result in savings of about $15 million due to reduced need for blood screens and fewer infected health-care workers.

The agency said it will continue to fail lots that have pinholes or visual defects.

WASHINGTON — As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare, and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities who generally are in poorer health, according to NASI. For example, more black Medicare beneficiaries than white beneficiaries have diabetes,

30% and 18%, respectively.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies. The panel suggested the federal government start addressing gaps in care by creating incentives to improve quality. Incentives should be carefully structured to avoid exacerbating disparities, however, said Mr. Vladeck.

To increase access, Medicare should ensure minorities are enrolled in Medicare supplemental insurance—or Medigap— plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses— from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on

94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

The top three reasons for collecting the data were to support language and culturally appropriate communications to enrollees, to identify racial and ethnic disparities in health care, and to implement or strengthen quality improvement efforts, according to the AHIP report. Commercial plans also say they use the data to conduct research and to identify patients with risk factors for some diseases.

Although more plans are collecting data,

“we think we have much more to do,” Ms. Ignani said, adding that with more data, health insurers can focus on how to eliminate disparities.

But barriers to data collection exist. Six states—California, Maryland, New Hampshire, New Jersey, New York, and Pennsylvania— have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to concern that data collection might be seen as illegal.

But a June 2006 analysis by the George Washington University School of Public Health and Health Services found not only is it legal for insurers to collect and report health quality data by race and ethnicity, but it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance on this, but have received no response, said Sara Rosenbaum, chairman of the university's health policy department.

WASHINGTON — As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare, and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities who generally are in poorer health, according to NASI. For example, more black Medicare beneficiaries than white beneficiaries have diabetes,

30% and 18%, respectively.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies. The panel suggested the federal government start addressing gaps in care by creating incentives to improve quality. Incentives should be carefully structured to avoid exacerbating disparities, however, said Mr. Vladeck.

To increase access, Medicare should ensure minorities are enrolled in Medicare supplemental insurance—or Medigap— plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses— from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on

94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

The top three reasons for collecting the data were to support language and culturally appropriate communications to enrollees, to identify racial and ethnic disparities in health care, and to implement or strengthen quality improvement efforts, according to the AHIP report. Commercial plans also say they use the data to conduct research and to identify patients with risk factors for some diseases.

Although more plans are collecting data,

“we think we have much more to do,” Ms. Ignani said, adding that with more data, health insurers can focus on how to eliminate disparities.

But barriers to data collection exist. Six states—California, Maryland, New Hampshire, New Jersey, New York, and Pennsylvania— have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to concern that data collection might be seen as illegal.

But a June 2006 analysis by the George Washington University School of Public Health and Health Services found not only is it legal for insurers to collect and report health quality data by race and ethnicity, but it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance on this, but have received no response, said Sara Rosenbaum, chairman of the university's health policy department.

WASHINGTON — As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare, and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities who generally are in poorer health, according to NASI. For example, more black Medicare beneficiaries than white beneficiaries have diabetes,

30% and 18%, respectively.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies. The panel suggested the federal government start addressing gaps in care by creating incentives to improve quality. Incentives should be carefully structured to avoid exacerbating disparities, however, said Mr. Vladeck.

To increase access, Medicare should ensure minorities are enrolled in Medicare supplemental insurance—or Medigap— plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses— from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on

94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

The top three reasons for collecting the data were to support language and culturally appropriate communications to enrollees, to identify racial and ethnic disparities in health care, and to implement or strengthen quality improvement efforts, according to the AHIP report. Commercial plans also say they use the data to conduct research and to identify patients with risk factors for some diseases.

Although more plans are collecting data,

“we think we have much more to do,” Ms. Ignani said, adding that with more data, health insurers can focus on how to eliminate disparities.

But barriers to data collection exist. Six states—California, Maryland, New Hampshire, New Jersey, New York, and Pennsylvania— have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to concern that data collection might be seen as illegal.

But a June 2006 analysis by the George Washington University School of Public Health and Health Services found not only is it legal for insurers to collect and report health quality data by race and ethnicity, but it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance on this, but have received no response, said Sara Rosenbaum, chairman of the university's health policy department.

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Outof-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-ofpocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Outof-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-ofpocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Outof-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-ofpocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

WASHINGTON – Patients who read at or below the 6th-grade level had a low level of comprehension of instructions on the labels of five commonly used medications, according to a study led by Terry Davis, Ph.D., of the Louisiana State University.

Even though labels seem short and to the point, “many patients need more specific, concrete information,” including instructions on exactly what time of day to take a medication, Dr. Davis said in presenting the findings at a conference on health literacy sponsored by the American College of Physicians.

Along with colleagues at Northwestern University, the University of North Carolina, Western Michigan Area Health Education Center, and Emory University, she queried 395 patients at three clinics that primarily serve the indigent about their understanding of labels for the following drugs: amoxicillin for pediatric use, trimethoprim, guaifenesin, felodipine, and furosemide (Ann. Intern. Med. 2006;145:887–94).

The goal was to determine whether primary care patients could read and correctly state how to take medicines after reading the labels on actual pill bottles, Dr. Davis said. The researchers hypothesized that patients with low literacy were more likely to misunderstand instructions. They also believed that the increasing number of medications taken by Americans is leading to growing confusion and medication errors.

Participants spoke English as a primary language and were not hearing or vision impaired. Half were African American and half were white. The mean age was 45 years, and 29% had a less than high school education. Literacy was assessed with the Rapid Estimate of Adult Literacy in Medicine (REALM) test. Of the 395 patients, 19% (75) were deemed to have low literacy, reading at or below a 6th-grade level, and 29% (114) had marginal literacy, reading at the 7th- to 8th-grade level.

All patients were asked how they would take the medicine. A “correct” answer was given if they included all aspects of the label instruction, including dosage, timing, and duration. Overall, 47% (185) of patients misunderstood at least one of the instructions. For marginal literacy patients, 51% (201) misunderstood one or more instructions, and for low literacy patients, 63% (249) misunderstood.

The majority–91%, or 359 patients–understood the felodipine instructions, which were, “Take one tablet by mouth once each day.” The lowest level of comprehension was for trimethoprim, which had a label instructing to “take one tablet by mouth twice daily for seven days.”

Higher literacy patients routinely understood instructions better than those with lower literacy, Dr. Davis said. The adjusted odds ratio of misunderstanding for low literacy was 2.32, and for marginal literacy, 1.94. Most misunderstandings had to do with dosage. For instance, patients commonly believed they should give children a tablespoon instead of a teaspoon of amoxicillin.

Patients who took more medications were also more likely to misunderstand labels, with the adjusted relative risk rising from 2.29 for 1–2 medications to 2.98 for 5 or more medications.

Study limitations included the fact that the authors only examined understanding of the primary label. They did not assess patients' actual compliance or drug-taking behavior, whether medication errors occurred, or if any of the patients had experience with any of the five medications.

In an editorial accompanying Dr. Davis' study (Ann. Intern. Med. 2006;145:926–8), Dr. Dean Schillinger wrote that the authors did not fully prove out their conclusion that low literacy is correlated with poor comprehension because they did not “account for patients' cognitive function or visual acuity–each of which can impair reading comprehension and could explain poor understanding of labels.”

But, he added, that “does not weaken the conclusion that many patients do not comprehend prescription labels and cannot act on their instructions.”

In fact, misunderstanding among patients at a typical internal medicine practice might be higher because patients are likely to be older, take more medications and have less English proficiency than those in the study, said Dr. Schillinger, of the University of California, San Francisco.

He said the study should prod physicians to routinely ask patients if they understand what medications they have been prescribed and how to correctly take them.

WASHINGTON – Patients who read at or below the 6th-grade level had a low level of comprehension of instructions on the labels of five commonly used medications, according to a study led by Terry Davis, Ph.D., of the Louisiana State University.

Even though labels seem short and to the point, “many patients need more specific, concrete information,” including instructions on exactly what time of day to take a medication, Dr. Davis said in presenting the findings at a conference on health literacy sponsored by the American College of Physicians.

Along with colleagues at Northwestern University, the University of North Carolina, Western Michigan Area Health Education Center, and Emory University, she queried 395 patients at three clinics that primarily serve the indigent about their understanding of labels for the following drugs: amoxicillin for pediatric use, trimethoprim, guaifenesin, felodipine, and furosemide (Ann. Intern. Med. 2006;145:887–94).

The goal was to determine whether primary care patients could read and correctly state how to take medicines after reading the labels on actual pill bottles, Dr. Davis said. The researchers hypothesized that patients with low literacy were more likely to misunderstand instructions. They also believed that the increasing number of medications taken by Americans is leading to growing confusion and medication errors.

Participants spoke English as a primary language and were not hearing or vision impaired. Half were African American and half were white. The mean age was 45 years, and 29% had a less than high school education. Literacy was assessed with the Rapid Estimate of Adult Literacy in Medicine (REALM) test. Of the 395 patients, 19% (75) were deemed to have low literacy, reading at or below a 6th-grade level, and 29% (114) had marginal literacy, reading at the 7th- to 8th-grade level.

All patients were asked how they would take the medicine. A “correct” answer was given if they included all aspects of the label instruction, including dosage, timing, and duration. Overall, 47% (185) of patients misunderstood at least one of the instructions. For marginal literacy patients, 51% (201) misunderstood one or more instructions, and for low literacy patients, 63% (249) misunderstood.

The majority–91%, or 359 patients–understood the felodipine instructions, which were, “Take one tablet by mouth once each day.” The lowest level of comprehension was for trimethoprim, which had a label instructing to “take one tablet by mouth twice daily for seven days.”

Higher literacy patients routinely understood instructions better than those with lower literacy, Dr. Davis said. The adjusted odds ratio of misunderstanding for low literacy was 2.32, and for marginal literacy, 1.94. Most misunderstandings had to do with dosage. For instance, patients commonly believed they should give children a tablespoon instead of a teaspoon of amoxicillin.

Patients who took more medications were also more likely to misunderstand labels, with the adjusted relative risk rising from 2.29 for 1–2 medications to 2.98 for 5 or more medications.

Study limitations included the fact that the authors only examined understanding of the primary label. They did not assess patients' actual compliance or drug-taking behavior, whether medication errors occurred, or if any of the patients had experience with any of the five medications.

In an editorial accompanying Dr. Davis' study (Ann. Intern. Med. 2006;145:926–8), Dr. Dean Schillinger wrote that the authors did not fully prove out their conclusion that low literacy is correlated with poor comprehension because they did not “account for patients' cognitive function or visual acuity–each of which can impair reading comprehension and could explain poor understanding of labels.”

But, he added, that “does not weaken the conclusion that many patients do not comprehend prescription labels and cannot act on their instructions.”

In fact, misunderstanding among patients at a typical internal medicine practice might be higher because patients are likely to be older, take more medications and have less English proficiency than those in the study, said Dr. Schillinger, of the University of California, San Francisco.

He said the study should prod physicians to routinely ask patients if they understand what medications they have been prescribed and how to correctly take them.

WASHINGTON – Patients who read at or below the 6th-grade level had a low level of comprehension of instructions on the labels of five commonly used medications, according to a study led by Terry Davis, Ph.D., of the Louisiana State University.

Even though labels seem short and to the point, “many patients need more specific, concrete information,” including instructions on exactly what time of day to take a medication, Dr. Davis said in presenting the findings at a conference on health literacy sponsored by the American College of Physicians.

Along with colleagues at Northwestern University, the University of North Carolina, Western Michigan Area Health Education Center, and Emory University, she queried 395 patients at three clinics that primarily serve the indigent about their understanding of labels for the following drugs: amoxicillin for pediatric use, trimethoprim, guaifenesin, felodipine, and furosemide (Ann. Intern. Med. 2006;145:887–94).

The goal was to determine whether primary care patients could read and correctly state how to take medicines after reading the labels on actual pill bottles, Dr. Davis said. The researchers hypothesized that patients with low literacy were more likely to misunderstand instructions. They also believed that the increasing number of medications taken by Americans is leading to growing confusion and medication errors.

Participants spoke English as a primary language and were not hearing or vision impaired. Half were African American and half were white. The mean age was 45 years, and 29% had a less than high school education. Literacy was assessed with the Rapid Estimate of Adult Literacy in Medicine (REALM) test. Of the 395 patients, 19% (75) were deemed to have low literacy, reading at or below a 6th-grade level, and 29% (114) had marginal literacy, reading at the 7th- to 8th-grade level.

All patients were asked how they would take the medicine. A “correct” answer was given if they included all aspects of the label instruction, including dosage, timing, and duration. Overall, 47% (185) of patients misunderstood at least one of the instructions. For marginal literacy patients, 51% (201) misunderstood one or more instructions, and for low literacy patients, 63% (249) misunderstood.

The majority–91%, or 359 patients–understood the felodipine instructions, which were, “Take one tablet by mouth once each day.” The lowest level of comprehension was for trimethoprim, which had a label instructing to “take one tablet by mouth twice daily for seven days.”

Higher literacy patients routinely understood instructions better than those with lower literacy, Dr. Davis said. The adjusted odds ratio of misunderstanding for low literacy was 2.32, and for marginal literacy, 1.94. Most misunderstandings had to do with dosage. For instance, patients commonly believed they should give children a tablespoon instead of a teaspoon of amoxicillin.

Patients who took more medications were also more likely to misunderstand labels, with the adjusted relative risk rising from 2.29 for 1–2 medications to 2.98 for 5 or more medications.

Study limitations included the fact that the authors only examined understanding of the primary label. They did not assess patients' actual compliance or drug-taking behavior, whether medication errors occurred, or if any of the patients had experience with any of the five medications.

In an editorial accompanying Dr. Davis' study (Ann. Intern. Med. 2006;145:926–8), Dr. Dean Schillinger wrote that the authors did not fully prove out their conclusion that low literacy is correlated with poor comprehension because they did not “account for patients' cognitive function or visual acuity–each of which can impair reading comprehension and could explain poor understanding of labels.”

But, he added, that “does not weaken the conclusion that many patients do not comprehend prescription labels and cannot act on their instructions.”

In fact, misunderstanding among patients at a typical internal medicine practice might be higher because patients are likely to be older, take more medications and have less English proficiency than those in the study, said Dr. Schillinger, of the University of California, San Francisco.

He said the study should prod physicians to routinely ask patients if they understand what medications they have been prescribed and how to correctly take them.

After reviewing nursing homes' emergency plans and outcomes of evacuations and sheltering for the last two hurricane seasons, the Health and Human Services Department's Office of Inspector General is suggesting that the Centers for Medicare and Medicaid Services strengthen federal emergency management standards for long-term care facilities.

Of the 16,125 nursing homes inspected nationwide in 2004 and 2005, 94% met federal standards for emergency plans, and 80% met those standards for emergency training, the OIG said.

The rates were similar for the 2,526 facilities in the Gulf states of Alabama, Florida, Louisiana, Mississippi, and Texas, according to the OIG's report. But it found in many cases that nursing home administrators and staff did not follow their own plans, or lacked transportation or other resources to effect those plans in a crisis.

The office reviewed state survey data for emergency preparedness and interviewed nursing home staff and administrators and local authorities in nine counties across the five affected states. The OIG took an in-depth look at plans from 20 nursing homes caught in hurricanes Ivan in September 2004, Katrina in August 2005, Rita in September 2005, and Wilma in October 2005, and compared those plans with provisions required by state law.

All 20 homes ran into challenges, whether they evacuated or not. All administrators said evacuation was not necessarily the best course of action as it could cause physical and mental stress. They also cited transportation contracts that weren't honored, complicated medication needs, and host facilities that were not available or prepared to receive evacuees.

Homes where patients were sheltered in place did not have as many problems overall but still had staffing and supplies issues.

At 5 of the 20 homes, administrators said they deviated from the prepared plan because the plan wasn't up to date or did not address their situation.

Six homes did not have instructions on how to evacuate to an alternative site, nine did not have any guidance on how to decide whether to evacuate or shelter in place, and 11 did not have any instructions on how to return to the homes after an evacuation.

Still, Dr. John Morley, director of the division of geriatric medicine for St. Louis University, said there is a need for an additional plan, saying this is an issue that “goes beyond a local plan and expecting nursing homes to do everything themselves.” He said “local police, emergency units, and everyone needs to be involved.”

The reality is that evacuation plans have to go beyond the facility because “if something goes wrong, it will affect” the entire area, Dr. Morley said. A facility may plan to use local buildings in an extended outage, but if there is a major disaster, “you probably have to move to another county.” Dr. Morley said the issue is not only having a plan and following it but “knowing when to evacuate,” given the risks of moving such a vulnerable population.

Indeed, during Katrina, facilities that did not evacuate were criticized, and others that tried to move to Houston had tragic deaths, Dr. Morley noted. He said emergency planning falls apart in older populations, including those in home care and hospice care, because “no one is very interested. We're an ageist society–we don't like old people so we don't plan for them. Then, we get all upset when things go wrong.” Dr. Morley also stressed the need for an “electronic database” to track patients as part of disaster preparedness.

The challenge of evacuations was underscored in the Sept. 21 grand jury indictments against two nursing home owners in New Orleans' St. Bernard Parish. The Katrina surge flooded the one-story facility to the ceiling in 20 minutes. The owners, Mabel and Salvador Mangano, were charged with negligent homicide in the drowning of 35 residents. However, they have maintained their innocence, saying they were worried that frail residents wouldn't survive the ordeal of an evacuation. The couple also has filed a legal document asking a judge to name a slew of local, state and federal officials as co-defendants in related complaints. The case is not likely to be resolved soon.

On a larger scale, to ensure better preparedness, CMS should develop a core set of required elements tailored to specific local risks, the OIG said, adding that the agency should also encourage greater collaboration between nursing homes and emergency management authorities.

After reviewing nursing homes' emergency plans and outcomes of evacuations and sheltering for the last two hurricane seasons, the Health and Human Services Department's Office of Inspector General is suggesting that the Centers for Medicare and Medicaid Services strengthen federal emergency management standards for long-term care facilities.

Of the 16,125 nursing homes inspected nationwide in 2004 and 2005, 94% met federal standards for emergency plans, and 80% met those standards for emergency training, the OIG said.

The rates were similar for the 2,526 facilities in the Gulf states of Alabama, Florida, Louisiana, Mississippi, and Texas, according to the OIG's report. But it found in many cases that nursing home administrators and staff did not follow their own plans, or lacked transportation or other resources to effect those plans in a crisis.

The office reviewed state survey data for emergency preparedness and interviewed nursing home staff and administrators and local authorities in nine counties across the five affected states. The OIG took an in-depth look at plans from 20 nursing homes caught in hurricanes Ivan in September 2004, Katrina in August 2005, Rita in September 2005, and Wilma in October 2005, and compared those plans with provisions required by state law.

All 20 homes ran into challenges, whether they evacuated or not. All administrators said evacuation was not necessarily the best course of action as it could cause physical and mental stress. They also cited transportation contracts that weren't honored, complicated medication needs, and host facilities that were not available or prepared to receive evacuees.

Homes where patients were sheltered in place did not have as many problems overall but still had staffing and supplies issues.

At 5 of the 20 homes, administrators said they deviated from the prepared plan because the plan wasn't up to date or did not address their situation.

Six homes did not have instructions on how to evacuate to an alternative site, nine did not have any guidance on how to decide whether to evacuate or shelter in place, and 11 did not have any instructions on how to return to the homes after an evacuation.

Still, Dr. John Morley, director of the division of geriatric medicine for St. Louis University, said there is a need for an additional plan, saying this is an issue that “goes beyond a local plan and expecting nursing homes to do everything themselves.” He said “local police, emergency units, and everyone needs to be involved.”

The reality is that evacuation plans have to go beyond the facility because “if something goes wrong, it will affect” the entire area, Dr. Morley said. A facility may plan to use local buildings in an extended outage, but if there is a major disaster, “you probably have to move to another county.” Dr. Morley said the issue is not only having a plan and following it but “knowing when to evacuate,” given the risks of moving such a vulnerable population.

Indeed, during Katrina, facilities that did not evacuate were criticized, and others that tried to move to Houston had tragic deaths, Dr. Morley noted. He said emergency planning falls apart in older populations, including those in home care and hospice care, because “no one is very interested. We're an ageist society–we don't like old people so we don't plan for them. Then, we get all upset when things go wrong.” Dr. Morley also stressed the need for an “electronic database” to track patients as part of disaster preparedness.

The challenge of evacuations was underscored in the Sept. 21 grand jury indictments against two nursing home owners in New Orleans' St. Bernard Parish. The Katrina surge flooded the one-story facility to the ceiling in 20 minutes. The owners, Mabel and Salvador Mangano, were charged with negligent homicide in the drowning of 35 residents. However, they have maintained their innocence, saying they were worried that frail residents wouldn't survive the ordeal of an evacuation. The couple also has filed a legal document asking a judge to name a slew of local, state and federal officials as co-defendants in related complaints. The case is not likely to be resolved soon.

On a larger scale, to ensure better preparedness, CMS should develop a core set of required elements tailored to specific local risks, the OIG said, adding that the agency should also encourage greater collaboration between nursing homes and emergency management authorities.

After reviewing nursing homes' emergency plans and outcomes of evacuations and sheltering for the last two hurricane seasons, the Health and Human Services Department's Office of Inspector General is suggesting that the Centers for Medicare and Medicaid Services strengthen federal emergency management standards for long-term care facilities.

Of the 16,125 nursing homes inspected nationwide in 2004 and 2005, 94% met federal standards for emergency plans, and 80% met those standards for emergency training, the OIG said.

The rates were similar for the 2,526 facilities in the Gulf states of Alabama, Florida, Louisiana, Mississippi, and Texas, according to the OIG's report. But it found in many cases that nursing home administrators and staff did not follow their own plans, or lacked transportation or other resources to effect those plans in a crisis.

The office reviewed state survey data for emergency preparedness and interviewed nursing home staff and administrators and local authorities in nine counties across the five affected states. The OIG took an in-depth look at plans from 20 nursing homes caught in hurricanes Ivan in September 2004, Katrina in August 2005, Rita in September 2005, and Wilma in October 2005, and compared those plans with provisions required by state law.

All 20 homes ran into challenges, whether they evacuated or not. All administrators said evacuation was not necessarily the best course of action as it could cause physical and mental stress. They also cited transportation contracts that weren't honored, complicated medication needs, and host facilities that were not available or prepared to receive evacuees.

Homes where patients were sheltered in place did not have as many problems overall but still had staffing and supplies issues.

At 5 of the 20 homes, administrators said they deviated from the prepared plan because the plan wasn't up to date or did not address their situation.

Six homes did not have instructions on how to evacuate to an alternative site, nine did not have any guidance on how to decide whether to evacuate or shelter in place, and 11 did not have any instructions on how to return to the homes after an evacuation.

Still, Dr. John Morley, director of the division of geriatric medicine for St. Louis University, said there is a need for an additional plan, saying this is an issue that “goes beyond a local plan and expecting nursing homes to do everything themselves.” He said “local police, emergency units, and everyone needs to be involved.”

The reality is that evacuation plans have to go beyond the facility because “if something goes wrong, it will affect” the entire area, Dr. Morley said. A facility may plan to use local buildings in an extended outage, but if there is a major disaster, “you probably have to move to another county.” Dr. Morley said the issue is not only having a plan and following it but “knowing when to evacuate,” given the risks of moving such a vulnerable population.

Indeed, during Katrina, facilities that did not evacuate were criticized, and others that tried to move to Houston had tragic deaths, Dr. Morley noted. He said emergency planning falls apart in older populations, including those in home care and hospice care, because “no one is very interested. We're an ageist society–we don't like old people so we don't plan for them. Then, we get all upset when things go wrong.” Dr. Morley also stressed the need for an “electronic database” to track patients as part of disaster preparedness.

The challenge of evacuations was underscored in the Sept. 21 grand jury indictments against two nursing home owners in New Orleans' St. Bernard Parish. The Katrina surge flooded the one-story facility to the ceiling in 20 minutes. The owners, Mabel and Salvador Mangano, were charged with negligent homicide in the drowning of 35 residents. However, they have maintained their innocence, saying they were worried that frail residents wouldn't survive the ordeal of an evacuation. The couple also has filed a legal document asking a judge to name a slew of local, state and federal officials as co-defendants in related complaints. The case is not likely to be resolved soon.

On a larger scale, to ensure better preparedness, CMS should develop a core set of required elements tailored to specific local risks, the OIG said, adding that the agency should also encourage greater collaboration between nursing homes and emergency management authorities.

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005–$6,697 per person–than in 2004, when expenditures were $6,322 per person. The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs–about 73%–were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies–which require consumers to pay more for higher-cost medicines–also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005–$6,697 per person–than in 2004, when expenditures were $6,322 per person. The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs–about 73%–were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies–which require consumers to pay more for higher-cost medicines–also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005–$6,697 per person–than in 2004, when expenditures were $6,322 per person. The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs–about 73%–were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies–which require consumers to pay more for higher-cost medicines–also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Stopgap funding passed at the end of the last Congress may not be enough to keep the State Children's Health Insurance Program afloat until its expected reauthorization this year, experts said in interviews with INTERNAL MEDICINE NEWS.

The program, commonly called SCHIP, was established in 1997 and funded with a 10-year, $40 billion allotment beginning in fiscal 1998. But that money has dwindled as states enrolled more children, according to advocacy group Families USA.

Under the law, money can be redirected from one state's surplus to plug another's deficit. In December, the 109th Congress voted to redistribute about $219 million in funds, which will go to Alaska, Georgia, Illinois, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, and Rhode Island, according to an analysis by the Washington, D.C.-based Center for Budget and Policy Priorities.

Those states were expected to face shortfalls first, but eight others—Iowa, Louisiana, Maine, Mississippi, Missouri, North Carolina, South Dakota, and Wisconsin—also are looking at a deficit.

Since they did not get the stopgap help, these states are now facing even bigger funding gaps than had been projected, according to the CBPP analysis. Those eight states may just be the tip of the iceberg.

“Congress is currently estimating that 14 states are projected to have insufficient federal SCHIP funds in fiscal year 2007,” Dr. Jay E. Berkelhamer, president of the American Academy of Pediatrics, said in a statement.

“This latest action is a down payment on the problem, and gives Congress time to consider more comprehensive solutions in the reauthorization process.”

The stopgap funding will likely only buoy the program until May, at which point “some states may begin to run out of funds and may be forced to reduce enrollment, curtail benefits, increase patient fees, or reduce provider payments,” Dr. Berkelhamer said.

The AAP, the March of Dimes, and the National Association of Children's Hospitals are urging Congress to increase SCHIP funding for the program to cover more children.

“According to the Current Population Survey, 49% of all uninsured children are eligible for Medicaid and 19% are eligible for SCHIP,” Dr. Jennifer L. Howse, president of the March of Dimes, said in a statement. “States must be given the tools and resources needed to enroll all eligible children in both programs.”

And the groups said they will push to ensure that quality of care gets attention in the next incarnation of SCHIP.

“There's been little federal investment in quality and performance measures for children's health care,” Lawrence A. McAndrews, president and CEO of the National Association of Children's Hospitals, said in a statement.

Most advocates believe that Congress will reauthorize the program.

By most measures, SCHIP has been a success. From 1997 to 2005, the percentage of uninsured children dropped from 22% to 15%, according to a report by the Georgetown University Health Policy Institute's Center for Children and Families. The gain for children came mostly through public coverage such as SCHIP and Medicaid.

Of 88 million children under age 19, 63%, or 55.5 million, are covered by employer-based plans. About a quarter, or 22 million, have insurance through SCHIP or Medicaid. About 6 million have only SCHIP coverage.

Nationally, 9 million children are still uninsured. Many are eligible for Medicaid or SCHIP, according to the report.

Some House and Senate members have said they want to see more eligible children enrolled before they massively expand SCHIP. Sen. John Kerry (D-Mass.) plans to reintroduce his legislation, S.114, which was introduced in 2005 and called for coverage of all children. That bill may receive more attention under a Democratic-controlled Senate.

Stopgap funding passed at the end of the last Congress may not be enough to keep the State Children's Health Insurance Program afloat until its expected reauthorization this year, experts said in interviews with INTERNAL MEDICINE NEWS.

The program, commonly called SCHIP, was established in 1997 and funded with a 10-year, $40 billion allotment beginning in fiscal 1998. But that money has dwindled as states enrolled more children, according to advocacy group Families USA.

Under the law, money can be redirected from one state's surplus to plug another's deficit. In December, the 109th Congress voted to redistribute about $219 million in funds, which will go to Alaska, Georgia, Illinois, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, and Rhode Island, according to an analysis by the Washington, D.C.-based Center for Budget and Policy Priorities.

Those states were expected to face shortfalls first, but eight others—Iowa, Louisiana, Maine, Mississippi, Missouri, North Carolina, South Dakota, and Wisconsin—also are looking at a deficit.

Since they did not get the stopgap help, these states are now facing even bigger funding gaps than had been projected, according to the CBPP analysis. Those eight states may just be the tip of the iceberg.

“Congress is currently estimating that 14 states are projected to have insufficient federal SCHIP funds in fiscal year 2007,” Dr. Jay E. Berkelhamer, president of the American Academy of Pediatrics, said in a statement.

“This latest action is a down payment on the problem, and gives Congress time to consider more comprehensive solutions in the reauthorization process.”

The stopgap funding will likely only buoy the program until May, at which point “some states may begin to run out of funds and may be forced to reduce enrollment, curtail benefits, increase patient fees, or reduce provider payments,” Dr. Berkelhamer said.

The AAP, the March of Dimes, and the National Association of Children's Hospitals are urging Congress to increase SCHIP funding for the program to cover more children.

“According to the Current Population Survey, 49% of all uninsured children are eligible for Medicaid and 19% are eligible for SCHIP,” Dr. Jennifer L. Howse, president of the March of Dimes, said in a statement. “States must be given the tools and resources needed to enroll all eligible children in both programs.”

And the groups said they will push to ensure that quality of care gets attention in the next incarnation of SCHIP.

“There's been little federal investment in quality and performance measures for children's health care,” Lawrence A. McAndrews, president and CEO of the National Association of Children's Hospitals, said in a statement.

Most advocates believe that Congress will reauthorize the program.

By most measures, SCHIP has been a success. From 1997 to 2005, the percentage of uninsured children dropped from 22% to 15%, according to a report by the Georgetown University Health Policy Institute's Center for Children and Families. The gain for children came mostly through public coverage such as SCHIP and Medicaid.

Of 88 million children under age 19, 63%, or 55.5 million, are covered by employer-based plans. About a quarter, or 22 million, have insurance through SCHIP or Medicaid. About 6 million have only SCHIP coverage.

Nationally, 9 million children are still uninsured. Many are eligible for Medicaid or SCHIP, according to the report.

Some House and Senate members have said they want to see more eligible children enrolled before they massively expand SCHIP. Sen. John Kerry (D-Mass.) plans to reintroduce his legislation, S.114, which was introduced in 2005 and called for coverage of all children. That bill may receive more attention under a Democratic-controlled Senate.

Stopgap funding passed at the end of the last Congress may not be enough to keep the State Children's Health Insurance Program afloat until its expected reauthorization this year, experts said in interviews with INTERNAL MEDICINE NEWS.

The program, commonly called SCHIP, was established in 1997 and funded with a 10-year, $40 billion allotment beginning in fiscal 1998. But that money has dwindled as states enrolled more children, according to advocacy group Families USA.

Under the law, money can be redirected from one state's surplus to plug another's deficit. In December, the 109th Congress voted to redistribute about $219 million in funds, which will go to Alaska, Georgia, Illinois, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, and Rhode Island, according to an analysis by the Washington, D.C.-based Center for Budget and Policy Priorities.

Those states were expected to face shortfalls first, but eight others—Iowa, Louisiana, Maine, Mississippi, Missouri, North Carolina, South Dakota, and Wisconsin—also are looking at a deficit.

Since they did not get the stopgap help, these states are now facing even bigger funding gaps than had been projected, according to the CBPP analysis. Those eight states may just be the tip of the iceberg.

“Congress is currently estimating that 14 states are projected to have insufficient federal SCHIP funds in fiscal year 2007,” Dr. Jay E. Berkelhamer, president of the American Academy of Pediatrics, said in a statement.

“This latest action is a down payment on the problem, and gives Congress time to consider more comprehensive solutions in the reauthorization process.”

The stopgap funding will likely only buoy the program until May, at which point “some states may begin to run out of funds and may be forced to reduce enrollment, curtail benefits, increase patient fees, or reduce provider payments,” Dr. Berkelhamer said.

The AAP, the March of Dimes, and the National Association of Children's Hospitals are urging Congress to increase SCHIP funding for the program to cover more children.

“According to the Current Population Survey, 49% of all uninsured children are eligible for Medicaid and 19% are eligible for SCHIP,” Dr. Jennifer L. Howse, president of the March of Dimes, said in a statement. “States must be given the tools and resources needed to enroll all eligible children in both programs.”

And the groups said they will push to ensure that quality of care gets attention in the next incarnation of SCHIP.

“There's been little federal investment in quality and performance measures for children's health care,” Lawrence A. McAndrews, president and CEO of the National Association of Children's Hospitals, said in a statement.

Most advocates believe that Congress will reauthorize the program.

By most measures, SCHIP has been a success. From 1997 to 2005, the percentage of uninsured children dropped from 22% to 15%, according to a report by the Georgetown University Health Policy Institute's Center for Children and Families. The gain for children came mostly through public coverage such as SCHIP and Medicaid.

Of 88 million children under age 19, 63%, or 55.5 million, are covered by employer-based plans. About a quarter, or 22 million, have insurance through SCHIP or Medicaid. About 6 million have only SCHIP coverage.

Nationally, 9 million children are still uninsured. Many are eligible for Medicaid or SCHIP, according to the report.

Some House and Senate members have said they want to see more eligible children enrolled before they massively expand SCHIP. Sen. John Kerry (D-Mass.) plans to reintroduce his legislation, S.114, which was introduced in 2005 and called for coverage of all children. That bill may receive more attention under a Democratic-controlled Senate.

The Food and Drug Administration has proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and will collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire on Sept. 30, 2007.

Under PDUFA, the FDA charges prescription drug makers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped the FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates.

“The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal. “The PDUFA recommendations announced today … will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement.

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. With those funds, the agency said it could hire 82 new employees and acquire the best tools for improving detection and analysis of safety signals. The agency also will institute new programs to reduce medication errors, in response to an Institute of Medicine report issued in September 2006 calling for drug safety improvements at the agency.

Some $20 million would go to cover past expenses incurred to facilitate drug makers' requests for formal meetings about their products. Sheila Mullin, FDA assistant commissioner for planning, said that in fiscal 2005, the agency held 1,800 formal meetings at manufacturers' request.

About $4 million would be devoted to the goal of moving to “an all-electronic environment,” according to the FDA proposal.

“Reviewing data electronically helps to improve the efficiency of the drug approval process and expedites getting important new drugs to the patients who need them,” said Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, in a statement.

FDA is proposing to create a new user fee program to fund the review of direct-to-consumer television ads. Currently, companies can voluntarily submit ads for review, but the FDA has not been able to keep up with the growing workload, Dr. Galson said. The FDA anticipates charging $6 million in the first year of the program, which would subsidize the hiring of 27 new employees. Another $6 million would be collected for a reserve fund, to cope with increases in volume of advertisements.

The Food and Drug Administration has proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and will collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire on Sept. 30, 2007.

Under PDUFA, the FDA charges prescription drug makers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped the FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates.

“The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal. “The PDUFA recommendations announced today … will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement.

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. With those funds, the agency said it could hire 82 new employees and acquire the best tools for improving detection and analysis of safety signals. The agency also will institute new programs to reduce medication errors, in response to an Institute of Medicine report issued in September 2006 calling for drug safety improvements at the agency.

Some $20 million would go to cover past expenses incurred to facilitate drug makers' requests for formal meetings about their products. Sheila Mullin, FDA assistant commissioner for planning, said that in fiscal 2005, the agency held 1,800 formal meetings at manufacturers' request.

About $4 million would be devoted to the goal of moving to “an all-electronic environment,” according to the FDA proposal.

“Reviewing data electronically helps to improve the efficiency of the drug approval process and expedites getting important new drugs to the patients who need them,” said Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, in a statement.

FDA is proposing to create a new user fee program to fund the review of direct-to-consumer television ads. Currently, companies can voluntarily submit ads for review, but the FDA has not been able to keep up with the growing workload, Dr. Galson said. The FDA anticipates charging $6 million in the first year of the program, which would subsidize the hiring of 27 new employees. Another $6 million would be collected for a reserve fund, to cope with increases in volume of advertisements.

The Food and Drug Administration has proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and will collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire on Sept. 30, 2007.

Under PDUFA, the FDA charges prescription drug makers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped the FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates.

“The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal. “The PDUFA recommendations announced today … will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement.

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. With those funds, the agency said it could hire 82 new employees and acquire the best tools for improving detection and analysis of safety signals. The agency also will institute new programs to reduce medication errors, in response to an Institute of Medicine report issued in September 2006 calling for drug safety improvements at the agency.

Some $20 million would go to cover past expenses incurred to facilitate drug makers' requests for formal meetings about their products. Sheila Mullin, FDA assistant commissioner for planning, said that in fiscal 2005, the agency held 1,800 formal meetings at manufacturers' request.

About $4 million would be devoted to the goal of moving to “an all-electronic environment,” according to the FDA proposal.

“Reviewing data electronically helps to improve the efficiency of the drug approval process and expedites getting important new drugs to the patients who need them,” said Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, in a statement.

FDA is proposing to create a new user fee program to fund the review of direct-to-consumer television ads. Currently, companies can voluntarily submit ads for review, but the FDA has not been able to keep up with the growing workload, Dr. Galson said. The FDA anticipates charging $6 million in the first year of the program, which would subsidize the hiring of 27 new employees. Another $6 million would be collected for a reserve fund, to cope with increases in volume of advertisements.

Overall health spending growth for 2005 hit its lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

"It is unclear whether this is temporary or indicative of a longer-term trend," lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita on health care in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person. The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to CMS, which published its findings in two articles in the January/February issue of Health Affairs (Health Affairs 2007;26:142–53, and Health Affairs 2007; 26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%–-were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail service are being used by both private and public payers. "PBMs have played a huge role in helping to drive prescription drug trends to an historic low," said Pharmaceutical Care Management Association president Mark Merritt in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multi-tiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared to Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped. However, the CMS researchers noted employees are still paying more for their health care through higher co-insurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working towards a health system that offers better quality and more access.

"Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States," said Ms. Davis in a statement.

Overall health spending growth for 2005 hit its lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

"It is unclear whether this is temporary or indicative of a longer-term trend," lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita on health care in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person. The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to CMS, which published its findings in two articles in the January/February issue of Health Affairs (Health Affairs 2007;26:142–53, and Health Affairs 2007; 26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%–-were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail service are being used by both private and public payers. "PBMs have played a huge role in helping to drive prescription drug trends to an historic low," said Pharmaceutical Care Management Association president Mark Merritt in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multi-tiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared to Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped. However, the CMS researchers noted employees are still paying more for their health care through higher co-insurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working towards a health system that offers better quality and more access.

"Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States," said Ms. Davis in a statement.

Overall health spending growth for 2005 hit its lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

"It is unclear whether this is temporary or indicative of a longer-term trend," lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita on health care in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person. The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to CMS, which published its findings in two articles in the January/February issue of Health Affairs (Health Affairs 2007;26:142–53, and Health Affairs 2007; 26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%–-were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail service are being used by both private and public payers. "PBMs have played a huge role in helping to drive prescription drug trends to an historic low," said Pharmaceutical Care Management Association president Mark Merritt in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multi-tiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared to Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped. However, the CMS researchers noted employees are still paying more for their health care through higher co-insurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working towards a health system that offers better quality and more access.

"Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States," said Ms. Davis in a statement.

WASHINGTON—As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to a report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare, and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to, care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities. Those minority beneficiaries generally are in poorer health, according to NASI. For example, more black Medicare beneficiaries than white beneficiaries have diabetes, 30% and 18%, respectively.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies.

The panel recommended that the federal government start addressing gaps in care by creating incentives to improve quality.

To increase access, Medicare should ensure that minorities are enrolled in Medicare supplemental insurance—or Medigap—plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs, according to the panel.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses—from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on 94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

The top three reasons for collecting the data were to support language and culturally appropriate communications to enrollees, to identify racial and ethnic disparities in health care, and to implement or strengthen quality improvement efforts, according to the AHIP report. Commercial plans also say they use the data to conduct research and to identify patients with risk factors for some diseases.

Although more plans are collecting data, "we think we have much more to do," Ms. Ignani said.

But barriers to data collection exist. Six states have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to some concern that data collection might be seen as illegal.

But a June 2006 analysis by the George Washington University School of Public Health and Health Services found that not only is it legal for insurers to collect and report health quality data by race and ethnicity, but that it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance in this area, but have not gotten a response yet, according to Sara Rosenbaum, chairman of the university's health policy department.

WASHINGTON—As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to a report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare, and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to, care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities. Those minority beneficiaries generally are in poorer health, according to NASI. For example, more black Medicare beneficiaries than white beneficiaries have diabetes, 30% and 18%, respectively.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies.

The panel recommended that the federal government start addressing gaps in care by creating incentives to improve quality.

To increase access, Medicare should ensure that minorities are enrolled in Medicare supplemental insurance—or Medigap—plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs, according to the panel.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses—from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on 94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

The top three reasons for collecting the data were to support language and culturally appropriate communications to enrollees, to identify racial and ethnic disparities in health care, and to implement or strengthen quality improvement efforts, according to the AHIP report. Commercial plans also say they use the data to conduct research and to identify patients with risk factors for some diseases.

Although more plans are collecting data, "we think we have much more to do," Ms. Ignani said.

But barriers to data collection exist. Six states have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to some concern that data collection might be seen as illegal.

But a June 2006 analysis by the George Washington University School of Public Health and Health Services found that not only is it legal for insurers to collect and report health quality data by race and ethnicity, but that it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance in this area, but have not gotten a response yet, according to Sara Rosenbaum, chairman of the university's health policy department.

WASHINGTON—As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to a report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare, and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to, care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities. Those minority beneficiaries generally are in poorer health, according to NASI. For example, more black Medicare beneficiaries than white beneficiaries have diabetes, 30% and 18%, respectively.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies.

The panel recommended that the federal government start addressing gaps in care by creating incentives to improve quality.

To increase access, Medicare should ensure that minorities are enrolled in Medicare supplemental insurance—or Medigap—plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs, according to the panel.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses—from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on 94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

The top three reasons for collecting the data were to support language and culturally appropriate communications to enrollees, to identify racial and ethnic disparities in health care, and to implement or strengthen quality improvement efforts, according to the AHIP report. Commercial plans also say they use the data to conduct research and to identify patients with risk factors for some diseases.

Although more plans are collecting data, "we think we have much more to do," Ms. Ignani said.

But barriers to data collection exist. Six states have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to some concern that data collection might be seen as illegal.

But a June 2006 analysis by the George Washington University School of Public Health and Health Services found that not only is it legal for insurers to collect and report health quality data by race and ethnicity, but that it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance in this area, but have not gotten a response yet, according to Sara Rosenbaum, chairman of the university's health policy department.